3 Recession-Proof Lessons We Can All Learn From the Medspa Industry

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3 Recession-Proof Lessons We Can All Learn From the Medspa Industry

By Charity Hudnall | Edited by Micah Zimmerman | Entrepreneur Magazine | September 2, 2024

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Estée Lauder chairman Leonard Lauder called it the “lipstick effect” — the growth in demand for small luxuries during times of economic uncertainty. The assumption behind this phenomenon is that when people are under more stress, beauty and self-care rituals offer a form of psychological comfort.

McKinsey even reported a surge in demand for skincare and wellness products during the pandemic. So, with fears of an economic downturn never far from the surface, might the same apply to the more affordable alternatives to surgical procedures like tummy tucks?

One of the most recognizable dermatology brands in the U.S., LaserAway, has now expanded to over 120 locations and reports the industry has been growing at over 20% annually in America. CEO Scott Heckmann says that LaserAway experienced “strong years” in 2008 and 2020 despite the recessions.  Three lessons can be drawn from this case example that can help other companies recession-proof themselves in an unpredictable economic climate.

1. A changing market is a good market.  When customers trust a clinic’s practitioners with something as sensitive as their bodies and faces, being very transparent about what’s involved in a procedure is critical to credibility. LaserAway’s social media features videos with real people, real nurses, actual treatments and basic plotlines — at their heart, these procedures are about helping people find their self-confidence.  Providing people with a realistic picture of likely outcomes also ensures they are more likely to end up satisfied with the treatment.  Technology has been a key factor. While cosmetic surgeons have a very limited audience at a high price point, medspa clinics offer myriad services that open the door to a large market — including an increasing number of men. In fact, skincare makes up 45.6% of the global men’s grooming market (worth $85.2 billion in 2023) as old masculine stereotypes give way to self-care among younger generations.
2. Diversification builds resilience.  In many industries, brands must be niche with their products or services. But medspa chains like LaserAway, Sculpt MD and Sono Bello can on-sell a range of services while still maintaining expertise in each area. That diversification is really important because it drives repeat customers and more revenue.  Medspa businesses offer an average of 47 services. Having a balance of higher and lower-value offerings like this is a great strategy to maintain steady income through economic fluctuations as people regard treatments as an ongoing investment in their well-being.
3. The power of referrals.  All beauty businesses need to be aware that the traditional sales model has evolved after first engaging customers through their different digital and marketing channels. The pandemic was the big impetus for digital influence, but people now want to be impacted through the use of real-life case studies instead of feeling like they are being “sold to.” Hence, the role of influencers.  The demand for more authenticity only reinforces the idea that the biggest point of sale in the beauty and wellness space should be referrals.

3 key takeaways from the article

1. Estée Lauder chairman Leonard Lauder called it the “lipstick effect” — the growth in demand for small luxuries during times of economic uncertainty. The assumption behind this phenomenon is that when people are under more stress, beauty and self-care rituals offer a form of psychological comfort.
2. One of the most recognizable dermatology brands in the U.S., LaserAway, has now expanded to over 120 locations and reports the industry has been growing at over 20% annually in America.
3. Three lessons can be drawn from this case example that can help other companies recession-proof themselves in an unpredictable economic climate.  These are:  a changing market is a good market, diversification builds resilience, and the power of referrerls.

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Topics:  Beauty Industry, Resilience, Diversification